- Food prices remain key contributor to uptick – Cardoso
- Apex bank extends BDCs’ recapitalisation by six months
As predicted by some financial experts, the Central Bank of Nigeria has again raised the Monetary Policy Rate to 27.50 percent from the existing 27.25 percent.
The latest decision represents the fifth time the apex bank has increased the interest rate this year, resulting in a cumulative increase of 875 basis points.
The CBN Governor, Olayemi Cardoso, said the decision to further hike the rate was that of 11 of the 12 members present at the meeting, making it a consecutive tightening of the rate since he took charge as CBN governor and MPC’s Chairman.
Rising from its 154th Monetary Policy Committee meeting in Abuja on Tuesday, Cardoso explained that the meeting also decided to retain the Cash Reserve Ratio at 50 percent for Deposit Money Banks and 16% for Merchant Banks.
According to Cardoso, “The Committee was unanimous in its agreement to raise the monetary policy rate by 25 basis points to 27.50 percent,” adding that the Committee retained the Liquidity Ratio at 30 percent and Asymmetric Corridor at +500/-100 basis points around the MPR.
He further stated thus, “The considerations of the meeting were held in the backdrop of renewed inflationary pressures as the headline food and core measures rose year on year in October 2024. Members, therefore, agreed unanimously to remain focused on addressing price developments.”
The CBN boss said the MPC noted that food prices remain a key contributor to the uptick, and lauded the Federal Government’s efforts at improved security, especially in the North East region, which would likely improve food production.
Similarly, the MPC noted the role of rising energy prices on the general price level due to its impact on factors of production, stressing that the recent increase in the price of Premium Motor Spirit (petrol) has also impacted the cost of production and distribution of food items and manufactured costs.
However, the Committee is hopeful that the full deregulation of the petroleum industry’s downstream sub-sector would eliminate scarcity and stabilize price levels in the short to medium term.
During its September 2024 MPC meeting, the CBN moved the MPR by 50 basis points to 27.25 percent from 26.75 percent, while retaining the asymmetric corridor of +500/-100 basis points.
Earlier this month, the National Bureau of Statistics pegged the country’s inflation levels at 33.88% for October 2024, up from 32.7% in September 2024.
It reflected a 1.18 percentage point month-on-month hike. The NBS in its Consumer Price Index attributed this to increased transportation costs and higher food prices.
According to the agency, on a year-on-year basis, the headline inflation rate was 6.55% points higher than the rate reported in October 2023 (27.33%).
Apex bank extends BDCs recapitalisation by six months
Meanwhile, the Association of Bureaux De Change of Nigeria has revealed that the CBN has extended the deadline for BDC operators to recapitalise by six months.
The ABCON President, Aminu Gwadabe, revealed this during a virtual general meeting with members on Monday.
With this extension, the new deadline for the recapitalisation would be June 3, 2025.
In May, the CBN issued new operational guidelines for BDCs, which became effective June 3 directing all existing BDCs to re-apply for a new licence according to their preferred categories (Tier 1 and Tier 2 BDCs) and meet the minimum capital requirement of the licence category applied for within six months from the effective date of the guidelines.
According to the guidelines, BDCs with Tier 1 licences are expected to have a capital base worth N2bn while Tier 2 licences must have N500m with non-refundable licence fees of N5m and N2m, respectively.
In a statement, Gwadabe noted that some BDCs have started complying with the CBN directive on recapitalisation.
He added that the apex bank has also approved a six-month extension for all BDCs to recapitalise their operations with the deadline moved from December 2024 to June 2025.
He said, “The CBN is willing to partner with BDCs to ensure that the recapitalisation process is seamless. We are sending a message of unity, collaboration, and opportunities to ABCON members to continue to strive to ensure they meet the new capital requirements. We thank the CBN for listening and giving us a six-month extension.”
He said the deadline applies to existing BDCs, while new operators seeking licences have an indefinite timeline to get their licences.
“I want us to brace up and see the opportunities in the recapitalisation, which are immeasurable. There are great opportunities,” Gwadabe said.
The ABCON boss said that CBN regulation empowers BDCs to acquire foreign currency from diverse sources, sell foreign exchange, and open foreign currency and naira accounts with commercial or non-interest banks as well as collaborate with its bankers to issue prepaid debit cards.
The operators in attendance at the meeting included over 220 CBN-licensed BDCs, ABCON Council members, and other stakeholders.
